Hinkley Point C: further delay on EDF’s final investment decision

EDF’s board had been expected to make the final investment decision today on a new nuclear power station, Hinkley Point C. EDF currently has a 66.5% stake in the project with two state-owned Chinese investors taking the remaining 33.5%.

EDF has however again delayed making a decision and there a number of valid reasons its board should be reluctant to green light the Hinkley Point C investment:

from a financial perspective, not only is EDF itself in financial difficulty with its share price falling but it appears to have been unable to persuade any investors to share the project risks and lend it the money it needs to raise in order to finance the project;

from a construction perspective, delays and cost overruns on similar EPR (European Pressurised Reactor) designs in France, Finland and China do not bode well for a project that it has been estimated will cost in the region of £16-24 billion; and

from a legal perspective, Austria and Luxembourg, as well as a number of German and Austrian energy companies, are currently challenging the EU Commission’s decision to allow the UK to subsidise Hinkley Point C through a Contract for Difference payment mechanism that guarantees the price of any electricity generated by Hinkley Point C at £92.50 a megawatt hour.